September 3, 2008
In my opinion, securities regulation will add very little to consumer protection since most states have already adopted the NAIC Annuity Disclosure Model Regulation. Also, most major index annuity carriers have mandated the use of disclosure statements describing the important terms and conditions of the contract. It seems the SEC is inferring that senior citizens are not able to comprehend the indexing concept due to advanced age. I'm almost 70 myself and have been selling life insurance and annuities for over 40 years. I haven't found that individuals my age have any more difficulty in grasping new concepts than the public in general. With our country's very low savings rate currently, we need to encourage savings by making annuities, CD's, etc. more readily available. Several layers of regulation would be counterproductive.
If certain individuals are misrepresenting indexed annuities, they should lose their licenses. The state regulatory agencies can take that action. What more could the SEC do? Several more pages of warnings and caveats to be signed will not prevent abuses.
The sales forces of most companies have been greatly reduced over the last ten to fifteen years. Requiring securities licenses of insurance agents to sell indexed annuities would lead to further reduction in the number of sales people in the field.